LONDON — Fast-fashion web site Boohoo.com kept quiet on any intentions of acquiring Nasty Gal on Thursday, a day after it revealed the purchase of its rival high street e-tailer 21 Three Clothing, which owns PrettyLittleThing.com.
Last month, speculation mounted that Boohoo might be poised to acquire Nasty Gal after it registered a new company, Nasty Gal Ltd., in the U.K. less than two weeks after the Los Angeles-based digital brand filed for Chapter 11 in California.
On Thursday a spokesman from Boohoo declined to comment on whether the purchase of Nasty Gal is of interest. But industry sources said that the British online retailer could be mulling a number of options, including buying Nasty Gal’s domain name and database for a knockdown price.
On Wednesday, Boohoo bought a 66 percent stake in PrettyLittleThing for 3.3 million pounds, or $4.2 million at current exchange. During the course of that day the stock spiked by more than 8 percent.
PrettyLittleThing offers trend-led, affordable clothing for customers between the ages of 16 and 24, similar to Manchester, England-based Boohoo. PrettyLittleThing is run by Umar Kamani, the son of Mahmud Kamani, Boohoo’s founder and chief executive officer.
Under the deal, which will be completed next month, Umar Kamani and other senior management members will retain the remaining 34 percent of the company’s share capital. Boohoo will be able to buy the outstanding stake by 2020.
“We believe this is an excellent opportunity to extend the group’s overall customer appeal through two distinct, complementary brands while further enhancing the group’s strong growth trajectory,” said Peter Williams, chairman of the Boohoo Group.
Year-on-year, PrettyLittleThing has seen its revenues rise 400 percent to 17 million pounds, or $21.5 million.
Boohoo has also been reporting steady growth. For the six months to Aug. 31 it reported revenues rose 40 percent 127 million pounds, or $157.5 million at average exchange for the period.
The acquisition of PrettyLittleThing plus strong sales gains around Black Friday led Boohoo to revise its growth forecasts on Wednesday. Revenues for this financial year are now expected to rise by up to 42 percent, versus the former guidance of 30 percent to 35 percent.
Kate Ormrod, an analyst at the retail agency Verdict, said that the news of the acquisition didn’t come as a surprise.
“The acquisition of PrettyLittleThing has enabled Boohoo to eliminate a rival and widen its reach,” she said. “The two brands are extremely complementary — both have a young customer base demanding on-trend clothing, value prices and regular newness. The brands are a good fit — especially as both are focused on innovation and customer engagement and utilize social media to maximum effect. PrettyLittleThing will benefit from Boohoo’s expertise, especially operationally as it grows in scale. New foreign-language sites would be a logical investment to better cater to overseas customers — just as Boohoo has done.”
Given the volatile economic environment that has caused some fast-fashion web sites such as Nasty Gal fail to keep their audiences engaged, Ormrod added that to sustain their relevance e-tailers should consider other strategies.
“For all online pure-plays, the challenge is to retain brand appeal, as well as remain top of mind while competing with multichannel retailers which have a physical presence,” said Ormrod. “Customer acquisition is vital but also prolonging brand appeal as shoppers age to prevent desertion to other clothing players. For example, Boohoo has invested in niche ranges such as maternity, as well as launching children’s wear.
“Exploiting all international growth opportunities will also be important — so investing in new country-specific web sites and improving the delivery proposition will help to drive appeal,” she continued. “There is also the prospect of physical retail, with online player Missguided launching stand-alone stores. This helps to better showcase product quality and design, which is difficult to convey online.”